May 2014 – Portfolio and Passive Income Updates!

I plan to retire early. I’m now 32 and I’d like to quit the rat race at or before 45. I still have a long way to go, but most of the times, things don’t go as planned, so I might be able to either retire later than that or… Let’s be positive. I could also retire earlier than that!! Who knows?!

Here are my portfolio’s updates :

Stocks

My first stock purchase was in november 2013. It took almost a month and a half to set up my self-directed brokerage account and to transfer the funds I had taken a couple of months to accumulate.

With 9956$ in hands, I had to pick my first stock.

Jean-Coutu (PJC-A.to), a well-know pharmacy and convenience store here in Canada had just sold its participation in Rite Aid. Things didn’t go as planned with their investment in that huge US pharmacy chain so they decided to back up. This resulted in a drop in the share price. But, with all the cash they were going to collect, Jean-Coutu announced a cash distribution of 0,50$ per share and also that they would buy 23,000,000 shares of their outstanding shares on the market.

At that time, Jean-Coutu was listed as a Canadian dividend aristocrat. Its dividend had been grown by 20% per year over the last 6 years. The current yield was a bit low though at around 1,85%, but it was one of its highest yield of the past 6 years. As you can see, this title is quite popular in Canada.

Also, over the last 5 years, Jean-Coutu had purchased back over 18% of its outstanding shares. And since they were about to buy another 23,000,000 shares (±20% of the outstanding shares), I knew that Jean-Coutu would be a good fit in my portfolio.

I purchased 200 shares of PJC-a.to at 18,49$ per share. They are now trading at 24,36$, an increase of 31,75% in the market value of the share in less than 6 months… Not bad! But this is the icing on the cake. It gives me a margin of safety I’d say. What I’m most interested in is my dividend income and Jean-Coutu did not disappointed me on that part. They have increased my dividends by 17,6%!!! Now that’s the kind of salary increase I like to get! This brings my yield on cost at 2,16% which is a little better but still low. While that kind of increase is not sustainable over the long term, I believe Jean-Coutu will increase its dividends at doubld digits for another couple of years. Time will tell!

I’m happy with my investment so far. Jean-Coutu is a well positioned brand. I like to go there myself. Its customers are happy and it has been recognized as one of the best corporations in Canada. The sales are growing and the demand for drugs is also growing with the baby-boomers getting older.

I plan to keep my shares for a long time… forever indeed!

McDonald’s was my second stock purchase. I bought 25 shares at 97,83$. I am a bit disappointed with the price I’ve paid. McDonald’s shares are now trading at 101,50$, which yields me 3,68% in paper capital gain. My margin is thin. I could have bought these shares at 93$ over the last months. But, timing the market is not an easy task.

But, McDonald’s is a cash cow. Over the long-term, I won’t care that I bought these shares 4 or 5 dollars more than I could have bought them. I now receive a yield on cost of 3,31% or 0,81$ per share.

McDonald’s is a dividend aristocrats who has not only paid, but also increased its dividend distribution every year since 1976.

While McDonald’s experiences growth difficulties currently, it still has a very strong position in the market and it sits on a huge pile of cash. I’m positive that McDonald’s is a good investment for me and as soon as there will be a dip in the market, I’ll had more McDonald’s shares to my portfolio.

Exxon was my 3rd purchase. Being the biggest oil company in the world makes Exxon a great investment.

Recently, Warren Buffett added to his position and it seems that great minds think alike (I’m just kidding, I will never compare myself to Warren Buffett, he’s a true genius and I’m a plain and ordinary stupid guy), because I bought shares at almost the same price than him.

With a strong balance sheet, Exxon is a dividend aristocrat and another cash-cow. Over the last 31 years, Exxon has increased its dividend distribution by a compounded rate of 6,1%. That’s a nice track!!!

And recently, I was glad to receive a 9,5% increase in my dividend stream when Exxon declared another increase of the quarterly dividend!

Bought at 90,15$ in february and now trading at 102,01$, this already gives me a strong 13,16% paper gain and margin of safety on my investment.

While I only have 20 shares of Exxon, I plan to allocate more money there over time and make Exxon one of my core holding.

Mattel has a hard time selling Barbies recently. Its share price dropped from 48$ per share to approximately 34$ per share when they announced the 2013 4th quarter results. While it’s not a good sign when a company’s sales are declining, I have decided to make a small bet on Mattel by purchasing 30 shares at 35,65$.

With a yield on cost of 4,26% and a price trading at its 52 weeks low, Mattel appeared to me as a good investment even though the payout ratio was 111% of free cash flow. I guess I sound more like a speculator here than an investor… But…

With core brands like Fisher Price, Barbies and many others, Mattel is the biggest player in the toy industry. Mattel’s moat is defined as narrow by Morningstar.

A couple of weeks after I bought my Mattel shares, Mattel announced that they would buy Mega Brands, a Lego competitor and that they had signed an agreement with Sony to make a movie about Barbie. The future prospects seems interesting to me.

Mattel is a strong company facing some headwinds. But, I think they will find ways to overcome these obstacles.

Mattel’s shares are now trading at 39,56$ even though BMO capital as downgraded them to 33$. There is a lot of uncertainty about Mattel right now, but riskier investment might also bring better return.

I sleep well with my ownership in Mattel, so we’ll let time pass and see what happens!

Fresh cash added to my brokerage account

I have a collective RRSP with my employer. On every paycheck, I transfer part of my income there and put it in a bond index fund until I have enough money to initiate a transfer to my brokerage account.

But these transfers take time!

On april 7th, I have asked my broker to transfer my money and I only received part of it last thursday.

I now have more than 6000$ to invest in undervalued dividend growth stocks and I know I still have another 4k waiting to be transferred.

My goal was to save 10,000$ per year. Last year, it took me approximately 8 months to reach my goal. This year, I have reached my goal in 4 months. By the end of 2014, I wish to have a 30,000$ freedom fund and I’m positive I’m going to reach my new goal!

The market is trading at all time highs right now and there are not a lot of opportunities right now.

In the past 12 months, the market has experienced 7 or 8 pull-backs. I have decided to wait for a pull-back before picking stocks unless I find a good opportunity. This should give me a margin to protect my capital.

Passive income from my blogs

I own 3 blogs from which I’m receiving some passive income.

It’s a hobby for me. I own blogs because I love to write. I also love to share my experiences and to help people.

I don’t currently really receive income from my blogs because I have to pay for the hosting and the money I “make” does not even cover the costs right now. Plus, I can tell you that I spend many hours per weeks maintaining these blogs and writing posts.

So, I’m actually losing money and time! 🙂

I know a lot of guys out there who are making quite a living from their blogs. But they all say the same thing. Treat your blog as a hobby and you’re gonna make hobby money! Treat it as a business and you can make some serious business money!

It’s a hobby for me. Not a business! But, I’m confident that the “income” from my blogs will grow over time because I think I share good information and try to give free tools to people so they can become better investors and avoid some pitfalls.

Unfortunately, english is not my first language but I think I might improve over time if I keep writing posts!!! Sorry for my grammar mistakes… I learned it at a late age…

In april, I have “received” (since I didn’t pass the 100$ threshold, I didn’t receive anything as of now) 2,37$.

It’s better than I thought since I had forgotten to confirm my address to Google Adsense and since I didn’t, they had suspended my account for 5 weeks… In two weeks, I made 2,37$! I use to need a full month to make that kind of income not so long ago. So, I guess things are improving but it’s hard to say right now…

Bob from www.christianpf.com pretends it takes 18 months before things really start to improve and before the income starts increasing exponentially. Maybe it’s something programmed in google search engine or maybe its just how life is made, but I clearly already see that I receive more visitors from google with time!

What about you? Do you receive passive income?

[author] [author_image timthumb=’on’]http://quityourdayjob101.com/wp-content/uploads/2014/03/ID-10050051.jpg[/author_image] [author_info]Hi, my name is Allan. I’m the masked blogger. Like you I’m a modern slave, prisoner of a 9@5 job in Corporate America. They told us when we were young that we would live in a society of leisure and that technology would permit us to work only a couple of hours per day. But we live in a society of stress and uncertainty. My situation could be a lot worse and I know it. So many humans are suffering on this planet. But a golden cage remains a cage anyway. At least, I have an escape plan. I will retire before 45 years old over my passive income. This is a dream that is so powerful that I will make sure it happens. To build my wealth, I mainly invest in undervalued dividend growth stocks. [/author_info] [/author]

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About The Author

Hi, my name is Allan. I'm 33 years old and I live in Canada, one of the best but one of the coldest country in the world! I'm the masked blogger. Like you I'm a modern slave, prisoner of a 9@5 job in Corporate America. But, I have an escape plan. I will retire before my 45th birthday over my passive income. This is a dream that is so powerful that I will make sure it comes true. To build my wealth, I invest in undervalued dividend growth stocks. Follow me! We will retire early! We will retire rich!

Disclaimer

I am not a licensed investment advisor. I am not an investment professional. I am not a tax professional. I am not a stock guru. I’m a plain and ordinary man pursuing a dream. I want to be financially free. I truly believe I will. But I might be dead wrong!
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